Private schools which enroll students at parent expense may have a greater incentive to deliver quality and control costs than publicly funded schools. Tuition-paying parents voluntarily select a school and will do so only if it delivers the services and quality they desire at a price they perceive as being fair. Private schools seeking to attract parents will balance program and cost considerations, controlling costs where possible. Because parents are spending their own money, tuition-based private schools may operate at lower total cost than either public or nonpublic schools for equivalent levels of service.

The influence that funding source (public or private) may have over costs can be seen in the following example from Pennsylvania. At the St. Lucy Day School in Upper Darby, Pennsylvania, thirty-two visually impaired children from five surrounding districts attend school. A Catholic school established in 1955, St. Lucy Day School is privately funded and operated. Tuition is $900 for Catholic students and $1800 a year for non-Catholic students.114

The actual per-pupil cost of the program is approximately $10,000, according to the schools principal. Catholic Charities subsidizes 70 percent of the total cost with the remaining 30 percent provided through tuition, endowments, and private philanthropy including the Lions/Lioness Clubs, Knights of Columbus, United Way and private individuals. St. Lucys does receive some workbooks and health-related therapy services from the public schools.

Two miles away from the St. Lucy Day School is the nonpublic Overbrook School for the Blind in Philadelphia enrolling 191 students.115 The per-pupil cost of Overbrooks day program totals $34,800 for a ten-month school year.116 Over 80 percent of the cost is publicly funded and parents pay no tuition.

Both the St. Lucy Day School and the Overbrook School are privately operated day programs. Both serve visually impaired students, although half the students at the Overbrook School have additional disabilities, which may contribute to higher per-student costs. Both schools provide low student-to-teacher ratios, individual instruction, and a ten-month, full-time school year. Both are in demand by parents. The Overbrook School serves students through the 12th grade, while the St. Lucy Day School enrolls pre-kindergarten through 8th-grade students.

Despite the similarities between the student populations, the two schools have significantly different cost structures; Overbrook spends three times as much as St. Lucys. Many factors may contribute to this cost difference. One reason may be that the St. Lucy Day School depends on private funding, including parent-paid tuition, for its continued operation making higher per-pupil expenditures more difficult to support. When parents have a stake in the cost of educating their child, they may be more concerned about the placements total costs. Research suggests that when local agencies which are making the placement decision for a particular student are also made to be responsible for a portion of the placement costs, they are more apt to seek to control total costs. (See Appendix I.) If true, public policies aimed at controlling costs could incorporate a local or private-pay component in the funding models for student placements.

Private schools (and nonpublic schools) enjoy a number of cost advantages over public schools. Their labor costs are often lower than public schools. Private schools for difficult-to-educate students must comply with all the laws applicable to regular private schools in the state in which they operate. Compared to nonpublic and public schools, however, private schools operate with fewer regulations and financial reporting requirements. Says private-school headmaster Dr. Roger Fazzone, "The absence of regulation was not a factor in why we chose to operate this way, but it sure does keep down costs."117 To accept public funding, he says his school would have to hire an additional administrator to keep track of expenditures and paperwork in compliance with state regulations. Currently, Maplebrook is audited once per year by an outside firm.

When tuition is paid privately, private schools reduce the taxpayer cost of providing education to difficult-to-educate students who otherwise might have attended publicly funded schools. As a matter of public policy, private placements should be encouraged to the extent that they provide quality education for students at virtually no public cost. (Private schools can access government funding for special-needs students, though the amount is generally a small portion of overall student costs.)